13 Best Communication Services Stocks To Invest In
In this article, we discuss 13 best communication services stocks to invest in. If you want to see more stocks in this selection, check out 5 Best Communication Services Stocks To Invest In.
According to UBS Global, there are three primary revenue and earnings drivers for the communication services sector – connectivity, including telecom and cable; content, including conventional and streaming media; and advertising, including offline and digital. Acceleration in digital advertising has been a focal driver for the communication services sector's earnings growth.
On January 5, Cox Communications, the privately held American cable and internet company, announced the official launch of its mobile business. Cox is now in competition with publicly traded peers including Comcast Corporation (NASDAQ:CMCSA), Charter Communications, Inc. (NASDAQ:CHTR), and Altice USA, Inc. (NYSE:ATUS). These companies started providing mobile services to customers recently and have been adding customers at a swift pace. Cable operators usually offer mobile services so that customers keep using their broadband packages as well.
For deeper exposure to the communication industry, investors can also check out 12 Best Communication Stocks To Buy Now, 11 Best Telecom Stocks To Buy, and 12 Best 5G Stocks To Buy Now.
Our Methodology
We selected the following communication services stocks based on overall hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged in ascending order of the number of hedge fund holders in each firm.
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Best Communication Services Stocks To Invest In
13. Vodafone Group Public Limited Company (NASDAQ:VOD)
Number of Hedge Fund Holders: 15
Vodafone Group Public Limited Company (NASDAQ:VOD) was incorporated in 1984 and is based in Newbury, the United Kingdom. Vodafone Group Public Limited Company (NASDAQ:VOD) specializes in telecommunication services in Europe and internationally, offering mobile services that enable customers to call, text, and access data, fixed line services such as broadband, television, and voice, as well as convergence services. On November 22, the company declared a $0.4658 per share semi-annual dividend, a 1.8% increase from its prior dividend of $0.4574. The dividend is payable on February 3, to shareholders of record on November 24.
On January 12, BofA analyst David Wright upgraded Vodafone Group Public Limited Company (NASDAQ:VOD) from Neutral to Buy, with a price target of 131 GBp for the shares. He believes that investor sentiment is currently low and the shares are now considered "cheap" based on revised consensus forecasts. He also believes that there could be positive revisions in the future due to decreasing energy costs and pricing traction.
According to Insider Monkey’s data, 15 hedge funds were bullish on Vodafone Group Public Limited Company (NASDAQ:VOD) at the end of September 2022, and Jim Simons’ Renaissance Technologies held the biggest stake in the company, with 21.8 million shares worth nearly $247 million.
In addition to Comcast Corporation (NASDAQ:CMCSA), Charter Communications, Inc. (NASDAQ:CHTR), and Altice USA, Inc. (NYSE:ATUS), Vodafone Group Public Limited Company (NASDAQ:VOD) is one of the best communication stocks to consider.
12. Nokia Oyj (NYSE:NOK)
Number of Hedge Fund Holders: 24
Nokia Oyj (NYSE:NOK) provides mobile, fixed, and cloud network solutions worldwide. The company operates through four segments – Mobile Networks, Network Infrastructure, Cloud and Network Services, and Nokia Technologies. On December 14, Nokia Oyj (NYSE:NOK)’s AVA Analytics software was selected by BT in a five-year deal to improve operators’ fixed access customer experience. Nokia Oyj (NYSE:NOK) is one of the best communication stocks to invest in.
On November 9, Deutsche Bank analyst Robert Sanders maintained a Buy recommendation on Nokia Oyj (NYSE:NOK) but lowered the firm's price target on the stock to EUR 5.50 from EUR 6. On January 10, Exane BNP Paribas analyst Stefan Slowinski said he prefers Outperform-rated Nokia Oyj (NYSE:NOK) to Ericsson, since the latter’s catalysts are "drying up."
According to the third quarter database of Insider Monkey, 24 hedge funds were long Nokia Oyj (NYSE:NOK), compared to 20 funds in the last quarter. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest stakeholder of the company, with 20.30 million shares worth $86.7 million.
11. CommScope Holding Company, Inc. (NASDAQ:COMM)
Number of Hedge Fund Holders: 29
CommScope Holding Company, Inc. (NASDAQ:COMM) specializes in infrastructure solutions for communications and entertainment networks. It operates through four segments – Broadband Networks, Outdoor Wireless Networks, Venue and Campus Networks, and Home Networks. It is one of the top communication stocks to invest in.
On January 12, BofA analyst Tal Liani double upgraded CommScope Holding Company, Inc. (NASDAQ:COMM) to Buy from Underperform and raised the price target to $15 from $8. The analyst believes expectations are low and the company could generate about $600 million to $700 million in free cash flow per year. If the stock can maintain its historical multiple, a $1 billion debt reduction could boost the share price by over $11, or 140%, the analyst argued.
According to insider Monkey’s data, 29 hedge funds were long CommScope Holding Company, Inc. (NASDAQ:COMM) at the end of Q3 2022, with combined stakes worth $425.6 million, compared to 28 funds in the last quarter worth $254 million. Bob Peck and Andy Raab’s FPR Partners held the biggest stake in the company, comprising 20.8 million shares worth $191.5 million.
10. Ciena Corporation (NYSE:CIEN)
Number of Hedge Fund Holders: 29
Ciena Corporation (NYSE:CIEN) offers hardware and software services for delivery of video, data, and voice traffic to access communications networks worldwide. The company operates through Networking Platforms, Blue Planet Automation Software and Services, Platform Software and Service, and Global Services segments. Ciena Corporation (NYSE:CIEN)’s CEO Gary Smith said in a statement on December 8 that he expects the company to deliver "outsized revenue growth in fiscal 2023 given our significant backlog and continued signs of gradual supply improvement."
On December 20, JPMorgan analyst Samik Chatterjee upgraded Ciena Corporation (NYSE:CIEN) to Overweight from Neutral with a price target of $60. The company's medium-term growth should speed up, driven by pent-up demand for network investments, the analyst told investors in a research note. He noted that Ciena Corporation (NYSE:CIEN)’s three-year targets put it above the peer group of networking companies in terms of growth.
According to Insider Monkey’s Q3 data, 29 hedge funds were long Ciena Corporation (NYSE:CIEN), compared to 23 funds in the preceding quarter. Anand Parekh’s Alyeska Investment Group is the largest stakeholder of the company, with 3.8 million shares worth $154 million.
Diamond Hill Capital made the following comment about Ciena Corporation (NYSE:CIEN) in its Q3 2022 investor letter:
“A selloff like the one we are seeing this year, though uncomfortable to live through in the near term, can provide opportunities for investors with a long-term discipline such as ourselves. New holdings initiated in Q3 included Ciena Corporation (NYSE:CIEN) and Regal Rexnord Corporation. Ciena is a leading optical networking equipment company. It is currently challenged by supply chain issues, but looking forward, we believe Ciena is well positioned to benefit from several trends driving demand for optical networking components and stands to win share from competitors like Huawei.”
9. Zebra Technologies Corporation (NASDAQ:ZBRA)
Number of Hedge Fund Holders: 31
Zebra Technologies Corporation (NASDAQ:ZBRA) is an Illinois-based company that provides enterprise asset intelligence solutions in the automatic identification and data capture solutions industry worldwide. The company also specializes in communications and collaboration solutions.
On December 20, Baird analyst Richard Eastman raised the firm's price target on Zebra Technologies Corporation (NASDAQ:ZBRA) to $315 from $300 and kept an Outperform rating on the shares. The analyst raised Zebra Technologies Corporation (NASDAQ:ZBRA) to a top idea in 2023 as he sees the stock positioned to recover following very challenging 2022 share performance. He sees an unfolding margin, and free cash flow recovery, providing near-to mid term catalysts for the stock.
According to Insider Monkey’s third quarter database, Zebra Technologies Corporation (NASDAQ:ZBRA) was part of 31 hedge fund portfolios, compared to 33 in the last quarter. John W. Rogers’ Ariel Investments is the leading position holder in the company, with 477,118 shares worth $125 million.
Ariel Investment made the following comment about Zebra Technologies Corporation (NASDAQ:ZBRA) in its Q3 2022 investor letter:
“We also bought shares of two companies held in other Ariel portfolios, leading global manufacturer of power generation equipment Generac Holdings, Inc. (GNRC) and bar-code manufacturer Zebra Technologies Corporation (NASDAQ:ZBRA).
Meanwhile, ZBRA’s brand strength, distribution network and commitment to innovation enable it to take share, earn industry-leading profitability and penetrate new markets. A recent pullback in stock price provided an attractive entry point. Shares have come under pressure due to investor concerns around inflation and supply chain disruptions. At current valuation levels, we think investors are underappreciating ZBRA’s alignment with the global effort to improve supply chain efficiency. At the same time, the company is leveraging the wide moat in its core business to expand into faster growing markets including warehouse robotics and machine vision. Meanwhile ZBRA continues to deliver prodigious free cash flow which we believe will continue to be deployed towards both growth and share repurchases.”
8. Juniper Networks, Inc. (NYSE:JNPR)
Number of Hedge Fund Holders: 36
Juniper Networks, Inc. (NYSE:JNPR) is a California-based company that designs, develops, and sells network products and services worldwide. The company specializes in routers, switches, network management software, network security products, and software networking technology. On December 14, Juniper Networks, Inc. (NYSE:JNPR) announced that Chinese International School has selected Juniper’s wireless solutions to construct a resilient AI-driven learning network to allow immersive digital learning experiences for its students and teachers. It is one of the best communication stocks to invest in.
On December 20, JPMorgan analyst Samik Chatterjee raised the price target on Juniper Networks, Inc. (NYSE:JNPR) to $42 from $39 and kept an Overweight rating on the shares. The analyst also added the shares to JPMorgan's Analyst Focus List.
According to Insider Monkey’s data, 36 hedge funds were long Juniper Networks, Inc. (NYSE:JNPR) at the end of Q3 2022, compared to 35 funds in the prior quarter. Israel Englander’s Millennium Management is the largest stakeholder of the company, with 6.4 million shares worth $168 million.
7. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 61
AT&T Inc. (NYSE:T) is a Texas-based provider of telecommunications, media, and technology services worldwide. The company deals in satellite television, fixed-line telephones, mobile telephones, and Internet services. On December 15, AT&T Inc. (NYSE:T) declared a $0.2775 per share quarterly dividend, in line with previous. The dividend is payable on February 1, to shareholders of record on January 10. The dividend yield came in at 5.68% on January 17. It is one of the premier communication stocks to invest in.
On January 10, Wells Fargo analyst Eric Luebchow upgraded AT&T Inc. (NYSE:T) to Overweight from Equal Weight with a price target of $22, up from $17. The analyst views the U.S. telecom sector as a relatively defensive play for 2023, noting wireless subscriber growth should remain greater than historical levels, fiber-to-the-home construction should continue to grow, and fixed wireless should continue taking share. The analyst named AT&T Inc. (NYSE:T) as his top wireless pick for 2023 on upside potential to consensus estimates, strong balance sheet, and attractive valuation.
According to Insider Monkey’s data, 61 hedge funds were bullish on AT&T Inc. (NYSE:T) at the end of September 2022, compared to 55 funds in the last quarter. D E Shaw is the leading stakeholder of the company, with nearly 14 million shares worth $214.3 million.
Here is what Chartwell Investment Partners has to say about AT&T Inc. (NYSE:T) in its Q2 2022 investor letter:
“In the Dividend Equity accounts, the three best performers in Q2 include AT&T (NYSE:T, 2.5%), up 17.1%. AT&T completed the spin off of the WarnerMedia business (HBO, CNN, etc.), and the market seemed to like the “back-to-basics” approach. Also, the telco business is expected to do relatively well in an inflationary environment.”
6. American Tower Corporation (NYSE:AMT)
Number of Hedge Fund Holders: 62
American Tower Corporation (NYSE:AMT) is one of the largest global REITs that owns, operates, and develops multi-tenant communications real estate properties. On December 8, American Tower Corporation (NYSE:AMT) declared a $1.56 per share quarterly dividend, a 6.1% increase from its prior dividend of $1.47. The dividend is payable on February 2, to shareholders of record on December 28.
On January 12, Deutsche Bank analyst Matthew Niknam upgraded American Tower Corporation (NYSE:AMT) to Buy from Hold with a price target of $254, up from $240. The analyst expects American Tower Corporation (NYSE:AMT)’s "well diversified" global portfolio to position it best as a top beneficiary of global mobile data traffic growth over the next several years.
According to Insider Monkey’s Q3 data, 62 hedge funds were long American Tower Corporation (NYSE:AMT), compared to 52 funds in the prior quarter. Charles Akre’s Akre Capital Management is the biggest position holder in the company, with approximately 7 million shares worth $1.5 billion.
Like Comcast Corporation (NASDAQ:CMCSA), Charter Communications, Inc. (NASDAQ:CHTR), and Altice USA, Inc. (NYSE:ATUS), American Tower Corporation (NYSE:AMT) is one of the top communication stocks to invest in.
Here is what Baron Real Estate Fund has to say about American Tower Corporation (NYSE:AMT) in its Q2 2022 investor letter:
“American Tower is a leading global tower company with 220,000 communication sites globally and over 40,000 in the U.S. We added to our position during the market dislocation and as it became increasingly clear that the company would put permanent equity financing in place at better-than-expected terms for its previously announced acquisition of CoreSite (thereby removing the “equity overhang”).
In addition, the company stepped back from a large potential deal in Europe, which would have required significant incremental funding, due to unfavorable contract terms and price. This decision further reinforced our confidence in management’s capital allocation discipline knowing that these were highly sought-after assets.”
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Disclosure: None. 13 Best Communication Services Stocks To Invest In is originally published on Insider Monkey.
